An Analysis of the Mutual Fund Performance in India's Banking Industry

Abstract

A mutual fund is a sort of investment mechanism that pools investor capital to make investments in stocks, bonds, gold, government securities, and other assets. Most investors look for various ways to diversify their portfolio while purchasing mutual funds. Spreading your investments across several economic sectors is a common strategy for investment diversification. One can use different mutual funds to invest in one or more particular economic sectors. Banking funds, which mainly concentrate on stocks, align their investment strategy with the operational and performance aspects of banks. Those who want to participate in the financial success of the banking industry should therefore consider them as a viable option. Investors with a high tolerance for risk who want above-average returns in expanding banking markets find them appealing. The return on the SBI Banking and Financial Services Fund over the last three months has been 6.17%. In terms of managed assets, the ICICI Prudential Banking and Financial Services Fund, which is the largest scheme in the category, generated a return of 2.75%. Nippon India Banking and Financial Services Fund, the category's oldest plan, returned 1.67% over the given period. The authors have endeavored to evaluate the efficacy of fund managers in managing sector funds by considering risk-return parameters. f well-informed and confident investors seek high returns at high risk, they will invest in these sectors according to the diversification policy of spreading unsystematic risk.